Translating the Benefits of IIoT to Executive Interests

November 28, 2016
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Operations Need Good Asset Management with IIoT

Operations groups obviously depend on good asset management and maintenance to achieve production objectives for on-time delivery with in-spec quality at minimum cost. To meet these goals, production needs the equipment to be available (uptime) and performing as required (capable). High uptime with low unplanned downtime becomes the key metric for maintenance. Uptime has been shown to be the top metric in multiple ARC surveys among maintenance and operations personnel over the past decade. Fundamentally, higher uptime enables production operations to perform optimally. The leading application of Industrial IoT (IIoT) is predictive maintenance to identify issues before they cascade into a failure with unplanned downtime or other forms of process degradation.

Uptime also affects inventory and the balance sheet. Manufacturers typically have a queue of materials between operations to buffer interruptions, particularly equipment failures. Higher equipment uptime reduces uncertainty and allows for lower inventory. This conserves cash and improves the balance sheet.

Asset longevity: Good asset management extends the useful life of assets, delaying the need for costly capital projects to replace or refurbish those assets. Avoiding capital expenditures conserves cash. With more cash, financial metrics improve, along with stock prices.

Cost control for maintenance: The demise of a relatively expensive component often cascades onto other system components (just as the loss of $20 of engine oil can cause your car’s engine to seize, leading to a $5,000+ repair). Without appropriate maintenance, repair costs can escalate dramatically.

Safety and risk management: Catastrophic equipment failure can put nearby people in danger. Also, failure of a major system can cascade into other systems, representing a significant business risk. Governance, including Sarbanes-Oxley compliance, necessitates good asset management.

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About ARC Advisory Group (www.arcweb.com): Founded in 1986, ARC Advisory Group is a Boston based leading technology research and advisory firm for industry and infrastructure.

For further information or to provide feedback on this article, please contact sgandhi@arcweb.com